The city's fee for a new Downtown Development Authority liquor license also is dropping from $1,000 to $600, and the annual renewal fee for all on-premise licenses is increasing from $50 to $90.

The city's Liquor License Review Committee — which includes Council Members Jane Lumm, Mike Anglin and Sumi Kailasapathy — recommended the changes.

Lumm said city staff, including the attorney's office, police department and city clerk's office, worked hard to come up with the fee amounts.

"I'd like to assure everyone that these are based on cost recovery, and these had not been reviewed in quite a while," she said.

"Again, it's just to recover our costs. We're providing a service here and we all felt that was important, and so there were adjustments up and down."

City Clerk Jackie Beaudry said the changes the city is making are based on changes made by the Michigan Liquor Control Commission and an internal staff review.

The MLCC changed its application process for licenses last year. Since that time, local approval is required only for new on-premise liquor licenses.

Beaudry said it had become difficult for city staff to consistently enforce the local application and approval process for transferred licenses, as the MLCC proceeds with license issuance without input from the city.

The city's Liquor License Review Committee discussed the issue with city staff and determined that the fee and review for on-premise license transfers and all packaged sales license applications should be eliminated.

Lumm noted the opportunity for local input regarding on-premise licenses still will be available during the city's annual renewal process in March for existing licensees.

New license applications will continue to be reviewed by city staff with recommendations made to the MLCC by the City Council.

The changes were approved unanimously by the City Council this week with three members absent — Marcia Higgins, Sally Hart Petersen and Christopher Taylor.

The state of Michigan's formula for doling out on-premise liquor licenses is 1 for every 1,500 people in a community. Right now Ann Arbor is at its cap of 76.

There are 64 active Class C liquor licenses that allow bars and restaurants to serve beer, wine and liquor, six licenses that allow hotels to serve beer, wine and mixed spirits, and an additional six Class C licenses that are allocated to Ann Arbor but are now held by establishments in other cities.

There are additional 186 active off-premise liquor licenses in Ann Arbor, including 37 that allow stores to sell liquor and 149 that allow stores to sell wine and beer. There is one additional liquor store license available at the moment.

State law was changed in 2006 to allow issuance of other on-premise liquor licenses — in addition to the population-based licenses — to businesses engaged in activities related to dining, entertainment and recreation in city development districts.

The City Council in 2008 established the DDA as its development district for liquor licensing in accordance with the new state law.

In order for businesses to get one of the new DDA licenses, they must make at least $75,000 in improvements to their property and have seating for 50 people.

"The requirement of the DDA license is pretty hefty," Anglin said, noting the licenses are site-specific. "It's an economic development tool."

Because of the strict requirements, and other state fees that still apply regarding liquor licenses, Anglin said the city isn't going to see a large influx of downtown businesses seeking liquor licenses just because the city fees have been lowered.